Tidy Profits

By Jeffrey Klineman

Kids are used to hearing they need to clean up their rooms. Now drinks aimed at kids are cleaning up their ingredients.

It’s part of a broader cleanup of American lifestyles. Particularly in the CPG arena, there’s a growing awareness that the earlier the life stage, the easier it is to create a natural or organic foods consumer.

And the kids themselves are aware, as well. Molly Kridel, a partner in Kid Kritics, which certifies products as both good for kids as well as “kid approved” through focus group testing, told BevNET that their young tasters themselves are more aware of what’s healthy and what isn’t – and will reject branded products that aren’t.

“The kids are looking to be healthier,” Kridel said. “As we teach kids what foods feed which body parts, they ask for them. And they’ll lecture us if we aren’t providing healthier products.”

Of course, that awareness is part of a larger product trend that involves providing healthy foods – or foods perceived as healthier alternatives – earlier.

Baby food has become the hottest product in the organics, for example, but to grow with consumers, companies like Plum organics have begun to move their products forward in time, to keep the brand part of kids’ lives as they leave the crib and start walking around.

In a similar vein, organic, natural, or just plain healthier beverages aimed at kids have also begun to take a hard look at the various life cycle stages of their potential customers. InZone Brands, for example, has divided its product lines into toddler, kindergarten, and grade school kids; Honest is looking to find a product for a slightly older grade schooler – one who may be outgrowing the pouch drink in Honest Kids. Apple & Eve might have a dependable license in Sesame Street characters, but it has also long reached out to older kids, as have carbonated juice products like The Switch. Wat-aah seems to be aiming for the “’tween” set as well, marketing a bottled functional water behind an 11 year-old named Sammi.

As it is, there’s been a massive growth in food and beverage products aimed at kids, according to a study by Mintel’s Packaged Facts research arm, and it’s expected to continue to grow up to 40 percent by 2015. And following larger trends, a lot of that growth will come from products that have been tidied up to have better sourcing, fewer calories, and better, more natural ingredients. For some product lines, that has meant reducing calories through artificial sweeteners, while for others it’s been through improving on the sweeteners that they have, or else fortifying whatever is included in the product.

The pressures on beverage companies to provide more offerings for children are also being influenced by changes in their old marketing strategies. Under the Alliance for a Healthy Generation initiative from the Clinton Foundation, signed by beverage firms in 2009, big soda companies agreed to limit the kinds of products they sell in schools. Meanwhile, marketers are attempting to advertise only juices, milk and water during television programs geared toward kids.

The increased scrutiny means that even products like Honest Kids are trying to make sure they present an even more compelling argument to parents. Already a product line that was closing in on one-third of the revenues of the Honest brand, according to founder Seth Goldman, Honest Kids replaced sugar with white grape juice in its formulations – this after it had famously trumpeted its lack of High Fructose Corn Syrup, a move it made in the face of owner the Coca-Cola Co., Inc.

“There weren’t any data points,” Goldman said of the decision to move to an all-fruit juice formulation. “It’s instinctive. And it makes it an even tighter product.”

And while juice is a more expensive sweetener than sugar, let alone HFCS, by tightening the product, a company is able to create a premium category where one had previously been nonexistent.

“The whole category has been defined, for a long time, by what might be on special,” Goldman said. “Parents haven’t had a chance to trade up.”

Now they will – the company is rolling out the re-worked Honest Kids nationally on Jan. 1 through its entire big-store network, including supermarkets, drug stores, Target and other channels – and it’s expected to cost twice as much as Capri Sun, but with Honest’s strong brand equity, retailers appear to be welcoming the opportunity.

Other companies are going beyond 100 percent fruit juice – to fruit juice that isn’t just fruit juice anymore because it’s actually infused with other things, like vegetable juices. In the best imitation of celebrity wife/cookbook author Jessica Seinfeld, who is a fan of sneaking veggies into otherwise palatable foodstuffs, earlier this year, Campbell’s took its V8 V-Fusion juice – which combines vegetables with fruit juice – and stuck it into lunchbox-ready drink boxes.

Another company trying to change kids’ diets through subterfuge is Sneaky Pete’s, an oat beverage disguised as a regular juice drink. Under the combined hands of co-founders Pete Stilianessis and Jerry Bello, this product’s attempts to get heart-healthy fiber into the hands of both kids and adults are symbolized by the mischievous rascal on the label.

A product that is similarly looking to combine fun and healthy is Califia Farms’ Cuties Juice, which is taking tangerines from Califia Farms in California and blending it with a number of other juices to create a line of smoothies, juice drinks, and even products fortified with protein or spirulina.

Lifeway foods has taken that natural and functional push even further, driving large revenues through a focus on kid-centric “Probugs,” its kefir line aimed at the younger set.

An interesting countervailing trend is that, while some companies are battling to batten down their all-natural, 100 percent juice profiles, others are going the opposite in an effort to tamp down obesity – an effort that has become much more widely accepted recently.

For example, artificial sweeteners have become much more widely accepted  for the kiddie set – more than twice as many kids consumed artificially sweetened drinks over a 24 month period from 2007 to 2008 as they did earlier in the decade, according to a recent federal nutrition survey.

That’s a curve that is likely to have turned sharply upward, however, given the even louder drumbeat against childhood obesity. Additionally, with the growth of products like Stevia and Erythritol there are even more zero calorie sweeteners on the market – even if they are considered to have been derived naturally. For example, True Drinks, Inc., formerly GT Beverages, is re-launching its “AquaBall” line of globe-shaped drinks next year, with a stevia-sweetened formula.